Apple iPhone X's production cost is a bit higher than the iPhone 8, but the gross margin is much bigger.
Apple iPhone X has the highest gross margin ever. Apple is known to sell its iPhones at much higher price points than its production cost expenditures. According to a report in Reuters, the iPhone X’s production cost is a bit higher than the iPhone 8, but the gross margin is much bigger. Incidentally, another report suggests that the price of the iPhone X has not deterred the buyers as the adoption rates are increasing. The Reuters report based on TechInsights, the new iPhone costs just $357.50 (approx Rs 25,000) for Apple to manufacture. The 10th anniversary iPhone has a starting price of $999, which essentially means that there is a margin of 64 percent on the device. Comparatively, Apple has a gross margin of 59 percent on the iPhone 8, whose starting price is $699.
However, when it comes to India, the price of the iPhone X is more than the $999 US price. The 64GB variant of the phone comes for Rs 89,000 ($1370) and the 256GB model comes for Rs 1,02,000 ($1570), if we go by the current conversion rate. This basically means that Apple has a higher overall margin on the iPhone X in India. The report informs that the full-screen display in the iPhone X costs $65.50, an amount much higher than $36 cost of the 4.7-inch display in the iPhone 8. But that is understandable since the iPhone X has an OLED screen which iPhone 8 has LCD.
Clearly, the Apple iPhone X, with its high price point, has a high gross margin. But compared to the iPhone 8, it reportedly has a higher adoption rate. A study by Localytics shows that after the first week, iPhone X has grabbed a 0.93 percent market share more than the iPhone 8. The new study also shows that the iPhone X managed to surpass the iPhone 8 in terms of share, but could not do more than the iPhone 6 even in the first week of sales. The report, however, says that the adoption rate might seem low because users now have more options in iPhones to choose from, than the situation in 2014. Meanwhile, in India, the phone is out of stock in e-commerce portals like Flipkart.
Meanwhile, Al Cowsky, Costing Analyst, TechInsights says, “Apple is unique in the electronics industry for its ability to charge a premium price for its latest devices and for its ability to maintain that price even when selling devices through third parties like telecom carriers.”